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I don’t understand this isn’t high frequency trading 100% technical analysis?

by flappyeagle 3y ago

3abiton 3y ago
Algo trading is a hoax?
_fizz_buzz_ 3y ago
High frequency trading is front running.
- yxhuvud 3y ago
  Front running is illegal, so no.
  - worik 3y ago
    > Front running is illegal, so no Yes Front running is illegal HFT is front running There are very good reasons to believe that. The earliest proponents of HFT may have made money by more efficiently using price information. But now there are so many of them that is no longer possible It is crime. The most useful model for understanding international high finance is "organized criminal networks"
    - chollida1 3y ago
      You are confidently incorrect. Front running is when you take an order from a client and before executing it out your own order in first so you benefit from the bumpe or drop in stock price that the client would cause. The key here is you have advanced knowledge of the order before it hits the market and you have a legal requirement to execute client orders before your own. I believe it’s also been ruled to be front running if you get knowledge of the client order in advance of it being sent to the market by a third party. But having a faster network and computer to allow you to react faster than others is not front running. Take this is an extreme, if I watch a market ticket and react manually with in 20 minutes to news and you read about the news in the paper the next day, did I front run you by trading before you? It’s the duty to execute a client order before your own and not tell others abouT the order before it hits the market that is the requirement for front running.
    - twic 3y ago
      The biggest HFT firms are prop shops. They don't even have clients. There aren't any client orders for them to front run! You know not what of you speak.
      - CyberDildonics 3y ago
        This is the cheapest defense of HFT front running. Buying order flow and front running other people's clients is still front running. You see what people want, you get it faster and you sell it back to them after you buy it.
        lxgr 3y ago
        How on earth can you front run other people’s clients? That contradicts the definition of front running!
        CyberDildonics 3y ago
        Does this circular logic for front running actually convince anyone? I already answered your question in the post you replied to.
        lxgr 3y ago
        I find it pretty convincing myself. Are there other “bad” (for the general investing public) strategies out there? Sure! Should some of them be illegal, or be made unprofitable by coming up with fairer (for long-term investors) markets and market structures? Definitely! But that doesn’t make them the same thing as front running. Why call “bad strategy/phenomenon X” “Y” and confuse everybody?
        yxhuvud 3y ago
        Yes, because it makes it very clear you have no idea of what you speak of, as you don't even know enough to use the correct terms for things. Front running is to act on confidential information in the market to the detriment of the initiator of the information. Once something is no longer confidential, ie the customer order has been processed, and all the information is open, then there can no longer be any front running.
ragebol 3y ago
Not a 100% AFAIK, there's some sentiment analysis on news as well and I suppose every other piece of machine-interpretable piece of information one can get their hands on. Along with human guidance still.
btilly 3y ago
According to the efficient market hypothesis, information can only be valuable until there has been time for information to circulate through the market, and the market price to reflect that information. This seems to happen in under 15 minutes. That's why 20 minute delayed ticker prices are generally available for free. HFT lives on happening so fast that the market price has not had time to catch up to the information that a trade is available. But it is a race against others in the same market. And an incredible amount of effort has gone into winning that race and making profits off of the increasingly narrow slice of time that markets are profitably inefficient for.
AnotherGoodName 3y ago
In general the goal of trading is to know more than other traders. High frequency trading is knowing about recent trades sooner than others. That's where the profit comes in. I see a difference here to technical analysis. HFT clearly has a data edge over those who just look at historical trend lines. I think it's reasonable to say this isn't technical analysis. It's not the historical analysis that gives the edge. It's the extra knowledge they have that gives the edge. Technical analysis is very much rooted in purely the historical price. If you have a way to predict prices with more knowledge than just the historical price you're getting outside the realm of technical analysis and into the realm of plain regular analysis where you take as much knowledge as you possibly can about the stock and figure out the price based on that huge volume of knowledge. This is why technical analysis is dumb. It assumes all the knowledge is in the price already and there's no way for some investors to know more than others outside the scope of that. HFT is in fact a great counter to that. Some people know incoming trades before the rest of the market. That extra knowledge allows for vast profits.
- hammock 3y ago
  >High frequency trading is knowing about recent trades sooner than others. That's where the profit comes in. btilly's comment has a good practical explanation of HFT that expands on this
  - AnotherGoodName 3y ago
    I very specifically said knowing about recent trades - note the past tense.
  - chollida1 3y ago
    This is not front running. You having a faster computer and network is just your alpha. Front running is where I take your order to buy a large amount of a stock and buy some for my self first before executing your order. Being faster is perfectly legal. Trading Based on a clients order is not.
lxgr 3y ago
No, high frequency trading makes money via arbitraging across markets, market making, and some other strategies that make its actors come out ahead on average. Technical analysis is largely astrology for stock markets for reasons many others here have already given, as far as I understand. (Note that it’s still possible to make money using a trading scheme based on astrology, namely if the market structure itself makes any participant come out ahead on average, and the scheme isn’t bad enough to outweigh that inherent advantage.)

I don’t understand this isn’t high frequency trading 100% technical analysis?

3abiton 3y ago

Algo trading is a hoax?

_fizz_buzz_ 3y ago

High frequency trading is front running.

yxhuvud 3y ago
Front running is illegal, so no.
- worik 3y ago
  > Front running is illegal, so no Yes Front running is illegal HFT is front running There are very good reasons to believe that. The earliest proponents of HFT may have made money by more efficiently using price information. But now there are so many of them that is no longer possible It is crime. The most useful model for understanding international high finance is "organized criminal networks"
  - chollida1 3y ago
    You are confidently incorrect. Front running is when you take an order from a client and before executing it out your own order in first so you benefit from the bumpe or drop in stock price that the client would cause. The key here is you have advanced knowledge of the order before it hits the market and you have a legal requirement to execute client orders before your own. I believe it’s also been ruled to be front running if you get knowledge of the client order in advance of it being sent to the market by a third party. But having a faster network and computer to allow you to react faster than others is not front running. Take this is an extreme, if I watch a market ticket and react manually with in 20 minutes to news and you read about the news in the paper the next day, did I front run you by trading before you? It’s the duty to execute a client order before your own and not tell others abouT the order before it hits the market that is the requirement for front running.
  - twic 3y ago
    The biggest HFT firms are prop shops. They don't even have clients. There aren't any client orders for them to front run! You know not what of you speak.
    - CyberDildonics 3y ago
      This is the cheapest defense of HFT front running. Buying order flow and front running other people's clients is still front running. You see what people want, you get it faster and you sell it back to them after you buy it.
      - lxgr 3y ago
        How on earth can you front run other people’s clients? That contradicts the definition of front running!
        CyberDildonics 3y ago
        Does this circular logic for front running actually convince anyone? I already answered your question in the post you replied to.
        lxgr 3y ago
        I find it pretty convincing myself. Are there other “bad” (for the general investing public) strategies out there? Sure! Should some of them be illegal, or be made unprofitable by coming up with fairer (for long-term investors) markets and market structures? Definitely! But that doesn’t make them the same thing as front running. Why call “bad strategy/phenomenon X” “Y” and confuse everybody?
        yxhuvud 3y ago
        Yes, because it makes it very clear you have no idea of what you speak of, as you don't even know enough to use the correct terms for things. Front running is to act on confidential information in the market to the detriment of the initiator of the information. Once something is no longer confidential, ie the customer order has been processed, and all the information is open, then there can no longer be any front running.

ragebol 3y ago

Not a 100% AFAIK, there's some sentiment analysis on news as well and I suppose every other piece of machine-interpretable piece of information one can get their hands on. Along with human guidance still.

btilly 3y ago

According to the efficient market hypothesis, information can only be valuable until there has been time for information to circulate through the market, and the market price to reflect that information. This seems to happen in under 15 minutes. That's why 20 minute delayed ticker prices are generally available for free. HFT lives on happening so fast that the market price has not had time to catch up to the information that a trade is available. But it is a race against others in the same market. And an incredible amount of effort has gone into winning that race and making profits off of the increasingly narrow slice of time that markets are profitably inefficient for.

AnotherGoodName 3y ago

In general the goal of trading is to know more than other traders. High frequency trading is knowing about recent trades sooner than others. That's where the profit comes in. I see a difference here to technical analysis. HFT clearly has a data edge over those who just look at historical trend lines. I think it's reasonable to say this isn't technical analysis. It's not the historical analysis that gives the edge. It's the extra knowledge they have that gives the edge. Technical analysis is very much rooted in purely the historical price. If you have a way to predict prices with more knowledge than just the historical price you're getting outside the realm of technical analysis and into the realm of plain regular analysis where you take as much knowledge as you possibly can about the stock and figure out the price based on that huge volume of knowledge. This is why technical analysis is dumb. It assumes all the knowledge is in the price already and there's no way for some investors to know more than others outside the scope of that. HFT is in fact a great counter to that. Some people know incoming trades before the rest of the market. That extra knowledge allows for vast profits.

hammock 3y ago
>High frequency trading is knowing about recent trades sooner than others. That's where the profit comes in. btilly's comment has a good practical explanation of HFT that expands on this
- AnotherGoodName 3y ago
  I very specifically said knowing about recent trades - note the past tense.
- chollida1 3y ago
  This is not front running. You having a faster computer and network is just your alpha. Front running is where I take your order to buy a large amount of a stock and buy some for my self first before executing your order. Being faster is perfectly legal. Trading Based on a clients order is not.

lxgr 3y ago

No, high frequency trading makes money via arbitraging across markets, market making, and some other strategies that make its actors come out ahead on average. Technical analysis is largely astrology for stock markets for reasons many others here have already given, as far as I understand. (Note that it’s still possible to make money using a trading scheme based on astrology, namely if the market structure itself makes any participant come out ahead on average, and the scheme isn’t bad enough to outweigh that inherent advantage.)